September 20, 2018
With an apparent impasse on competing acquisition offers accepted by Sky shareholders from 21stCentury Fox, Comcast and The Walt Disney Co., a U.K. regulatory agency is set to take the unusual step of authorizing a one-day auction between the competing suitors.
The Panel on Takeovers and Mergers Sept. 20 issued a statement declaring that after discussions with all parties involved, an auction for controlling interest in Sky would begin at 5 p.m. on Sept. 21 and end sometime on Sept. 22 after three rounds of bidding. The bids will not be made public during the auction but will reportedly be made available by Sept. 24.
“On the basis that neither offeror has declared its offer final, such that either offer may be increased or otherwise revised, a competitive situation continues to exist for the purposes of ‘Rule 32.5 of the Takeover Code’”, wrote the panel.
The Panel said that by 7.00 am (London time) on Sept. 24, each of the Sky suitors is required to make an announcement under “Rule 2.7 of the Code” of a revised offer in respect of its latest bid lodged in accordance with the auction procedure (or alternatively, if it did not lodge an increased bid during the auction procedure, a confirmation of its pre-existing offer).
To accommodate the auction, both Comcast, Fox (and Disney, which is acquiring 20thCentury Fox and Fox’s 39% stake in Sky for $71 billion) extended the merger deadline until Oct. 6.
With 23 million subscribers across the U.K., Italy and Germany, Sky is a lucrative pay-TV operator and asset to Comcast and Disney looking to expand their respective brands globally (Comcast) and thwart Netflix’s ongoing global reach (Disney). The company generated more than $12.9 billion in revenue in 2017.
Sky investors have long eyed a bidding war for the company, which is why the stock is trading significantly higher (£15.78) than Comcast’s $34 billion (£14.75 per share) offer compared to Fox’s £14 per share bid.
Indeed, neither offer has resonated with Sky shareholders, with less 30% of stakeholders tendering Comcast’s offer compared to 0.07% for Fox’s offer.
A timeline on the Sky acquisition is as follows:
On Dec. 15, 2016, Fox announced a cash offer for the shares in Sky it did not already own at £10.75 per Sky share.
On Feb. 27, 2018, Comcast announced that it was considering making an offer for Sky. On April 25, Comcast announced a cash offer at £12.50 per Sky share. Later that day, the independent directors of Sky announced that they were withdrawing their recommendation of the Fox offer.
On July 11, Fox announced an increased cash offer for Sky at £14.00 per Sky share. Later that day, Comcast upped its cash offer for Sky at £14.75 per Sky share.